What's so great about virtual goods for flash games?

[TylerBetable]

A lot of people have been chasing the virtual goods carrot recently, but are they still the best way for small developers to make a game?

The problem with virtual goods is that you need millions of users in order to reach $1M in revenue, especially with free-to-paid conversion rates for most social games being in the single digits and average revenue per user (ARPU) often hovering around $1. I wrote a in-depth blog post about this (read it here: http://betab.ly/qAe4Vr) and would love some feedback. Thanks!

[tomsamson]

When talking about virtual goods stuff you bring up a lot of the downsides.
The thing is: several of those also in some way apply to your gambling kinda setup you propose as alternative.
I think gambling kinda stuff just like micro transactions with other context (unlocking content with them etc) can work very well for some kind of games for some kinds of audiences but as you nicely listed, there are many issues there and in the long run it shows larger issues with the flash gaes and games industry in general and at large which is largely centered around the sides that there is way more content than can be played by people and people are used to prices for content which are for the large majority of (non pupil/hobbiest) game developers not a way to get a sustainable business going or keeping it rolling nicely and halfway reasonably risk free for a long time.

[TylerBetable]

Hey tomsamson, well said. I think that Flash games are an especially challenging area. You mention that the majority of flash game players aren't willing to put up money for a game, and that even when they are, it's usually for a very small amount. The major difference between 'microtransactions for content' and gambling is that the allure of winning real money makes the game itself more interesting. It adds incentive for the player to deposit and also to play more.